Banking/Financial Institutions

Countrywide, the former mortgage giant, will pay $108 million to settle federal accusations of overcharging and deceiving borrowers before the financial crisis.

Bank of America acquired Countrywide in 2008, which was at the time the top servicer of mortgages, with a portfolio in excess of $1 trillion. The firm had expanded deep into the market for subprime and nontraditional mortgages at the heart of the housing market collapse.

The Federal Trade Commission (FTC) opened an investigation into excessive fees charged to borrowers. The FTC alleged that Countrywide ordered property inspections and other services that charged borrowers heavy fees as part of a way to drive profit to the mortgage giant. The $108 million will be used to reimburse overcharged borrowers.

"This is a major breakthrough that closes one of the ugliest chapters of the entire subprime mortgage crisis," Sen. Charles Schumer (D-N.Y.) said Monday. "This settlement should be seen as an admission by those behind Countrywide that they made a habit of profiting off the misfortune of their most troubled borrowers."

Goldman Sachs had failed to quickly hand over documents, according to the financial crisis commission.

Former Federal Reserve economist Robert Bliss cautioned lawmakers on Friday against moving too fast to complete work on the Wall Street reform bill, saying a rush could produce unintended consequences down the road.

"Some of the changes are positive, but others could create bigger problems than the one they are trying to solve," he said about the bill in prepared remarks.

A House-Senate conference is hoping to complete work on the bill by the July 4 recess. Bliss argues that that goal does not give lawmakers enough time to get additional public feedback on issues like how regulating the over-the-counter derivatives market, expanding audits of the Federal Reserve Board and creating a new consumer protection agency will affect the worldwide market.

The Securities and Exchange Commission is reviewing responses and is expected to begin phasing in its circuit-breaker proposal within the next couple of weeks. 

The SEC is looking to require national securities exchanges and the Financial Industry Regulatory Authority (FINRA) to pause trading in certain individual stocks if the price moves 10 percent or more in a five-minute period in response to a nearly 1,000 point drop in the market on May 6. 

The plan to roll out the new stock-by-stock circuit breakers was slated to start Monday. Regardless, the plan is expected to be in place by mid-June. 

Staff will present proposals to the commission sometime next week then move forward with putting the circuit-breakers in place. 

"The SEC staff is now reviewing and analyzing the comments that were received over the course of the public comment period that ended yesterday," SEC spokesman John Nester said Friday in a release. 

Speedway Convenience Stores sent an additional 1.7 million signatures to lawmakers on Thursday as part of a petition to reform credit and debit card swipe fees. 

Today's action brings the total to 5.4 million signatures, the largest number ever collected for a public policy petition. 

The Treasury Department on Thursday announced that warrants for common stock in First Financial Bancorp are priced at $6.70. The Department expects to raise approximately $2.9 million by publicly offering 465,117 warrants in the company.

U.S. and British officials are expected to urge Europe to perform bank stress tests as a way to calm concerned investors and restore confidence worldwide.

Treasury Secretary Timothy Geithner is expected, along with others, to push for a more public disclosure of strong and weak banks in Europe that could help calm worries during a meeting of finance leaders from the Group of 20 in Busan, South Korea, over the next couple of days. 

"I think the Europeans have laid out a very strong, very comprehensive program of policy reforms and financial support to help the countries of Europe manage through these tensions and pressures," Geithner told reporters Wednesday. "I do think there's a very good case for trying to bring more transparency and disclosure to these markets and to major institutions. And I think there's broad support in Europe for doing that, again, because it reflects basic reality — uncertainty has a price."

White House spokesman Bill Burton agreed earlier Wednesday, saying, "the United States is confident that European leaders have been doing the right thing by putting in place reforms that help to keep their financial institutions strong and help to shore up their own economies." 

British Financial Secretary to the Treasury Mark Hoban went as far as demanding today that eurozone banks undergo stress tests. 

"A genuine, rigorous stress-testing exercise is urgently needed to answer questions around solvency in severe market conditions," Hoban said in Brussels. 

Congress should proceed with caution when considering any legislation that might effect the availability of credit for small businesses, according to a recent report by the Federal Reserve. 

Before applying certain provisions designed to protect consumers to small businesses credit cards, lawmakers would need to "recognize the potential for adverse effects on the cost and availability," of those cards, according to the report. 

"What is clear is that small businesses will lose access to small business credit cards if lenders are restricted in their flexibility to manage risk," he said. "That would be a terrible blow to small businesses nationwide as they seek to stabilize their operations, grow their business and hire new employees. The potential must be of paramount consideration to any effort to regulate small business cards."

Citigroup will cut between 500 and 600 U.S. jobs in its consumer-lending arm to make the company more attractive to prospective buyers, officials said Tuesday. 

CitiFinancial will close 330 branches in 48 states and shut down 46 branches, cutting another 120 jobs in Canada, about 6.4 percent of the unit's staffs in the two countries, Mary McDowell, CEO of the division, said in an interview. 

The U.S. businesses of CitiFinancial will be renamed after a reorganization that will split CitiFinancial in two, one for personal, home equity and refinancing loans and the other for expanded support including loan modifications and restructuring. The new brand will be unveiled later this year, McDowell said. 

The branch cuts “should provide a lot more clarity in terms of potential buyers looking at the full-service network branches, and being able to grow that segment,” she said in a release Tuesday. “We think it does increase the salability and eventually the fundability, because whoever buys CitiFinancial will need to fund it.”

Haiti's $36 million debt to the World Bank was canceled to further spur their recovery from a massive earthquake in January. 

Wiping out the country's International Development Fund debt was aided by 13 countries, the World Bank announced Friday. 

"Reliving Haiti's remaining debt is part of our effort to pursue every avenue to help Haiti's reconstruction efforts," said World Bank Group President Robert Zoellick in a statement. "We will continue to work in close cooperation with the Haitian government and our international partners to support the country's recovery and longer-term development."

The World Bank has provided $479 million in grants to support the recovery through June 2011. The bank also is involved in the Haiti Reconstruction Fund, which has donors from several countries. 

It's the second time in the past year that Haiti has been granted debt relief. In July 2009, $1.2 billion of debt was forgiven. 

Belgium, Canada, Finland, France, Germany, Ireland, Italy, Japan, The Netherlands, Norway, Spain, Sweden and Switzerland all contributed to erase the debt.